Southern Challenges Missouri Residency Requirement, Again

FILED SEPTEMBER 11, 2012

Dear Client:

In July we learned that Southern Wine & Spirits had filed papers to appeal a Missouri district court ruling to uphold the state's residency requirement, which essentially blocks Southern from opening operations in Missouri. Well, now Southern's opening brief with the Eighth Circuit Appeals Court is in, and it seems they have shifted tactics a bit. Recall that in its initial lawsuit (which it lost), Southern applied the same logic that was used in Granholm v. Heald by arguing that the state's residency requirement was in violation of the Commerce Clause. The judge, however, did not agree. Granholm "only related directly to producers of alcoholic goods," wrote Judge Nanette Laughrey. Furthermore, "The language of Granholm thus allows Missouri to discriminate in favor of in-state wholesalers."

Through its new counsel, Southern again focuses mostly on the commerce clause in its 45-page brief, but with only a little space devoted to the equal protection claim and no mention of the privileges and immunities challenge. "The attorneys concentrate on what they feel the protectionist nature of the Missouri law and a lack of evidence by the state to defend the policy," NBWA's Paul Pisano writes in his blog (Alcohol Law Review).

In court documents Southern concedes that the 21st Amendment protects "state liquor laws from Commerce Clause scrutiny in some circumstances," like allowing states to impose a three-tier system. However, "that does not mean a state can shut the door to interstate commercial interests in any way it pleases," they argue. Furthermore, "legislative history demonstrates that the Missouri legislature enacted the discriminatory provisions not to further the three-tier system, but to protect local businesses from out-of-state competition."

Is the second time a charm? We'll see. But this case is interesting because it's the second or third time Southern -- a wholesaler -- has used Granholm to fight state-based alcohol laws. They succeeded in overturning Texas' residency requirement using Granholm. They want to enter Missouri to take on Major Brands, which is a major wine and spirits house there; (they are also an A-B distributor in Miami).

IOWA: A-B DEAL WAS A MISTAKE?

University of Iowa President Sally Mason says in hindsight, she probably wouldn't renew a contract with Anheuser-Busch because of the backlash.

Mason says she's not sure it's worth the revenue. During a taping on Iowa Public Television's "Iowa Press" program on Friday, Mason said she'd probably reconsider and more than likely not even do it. Iowa and Anheuser-Busch have a new four-year agreement that allows A-B to use Iowa's Tigerhawk logo on its posters, beer cups and T-shirts.


ANDY SPEAKS ON THE POWER OF BRANDS

MillerCoors cmo Andy England recently gave a talk to the Association of National Advertisers via a webcast. According to Andy, "some drinkers prefer a beer that's bigger and 'hoppier,' others want low alcohol, and many want to find a craft beer. We have brand teams for each brand and an innovation group that is working on building fledgling brands."

"To win in the future in most categories," says Andy, "there needs to be more brands. In America, it's easier to be yourself than ever. Consumers expect more choices suited ideally for them. This is the evolution of one-to-one marketing. Consumers now expect that brands of specific personal interest will come to them via social channels or intuitive marketing. Perhaps we are spoiled consumers who assume that marketers should know how to reach us wherever we are. Marketers who can balance reaching so many consumers effectively across the supply chain -- that's the future."

"We want 'Rocky Mountain refreshment' to come alive. If a Coors beer is colder in the hand, due to advances in aluminum, then this enhances the brand attributes."

TEXAS SNAKE FOUND IN GUINNESS LOAD IN IRELAND

Put this story in the bizzaro file. In a country famous for its lack of snakes, a Texas beer distributor has done its best to introduce that species to the emerald island. A non-poisonous corn snake was found at St James's Gate in Dublin after apparently arriving in a container of empty Guinness kegs from Texas. Diageo officials called the Dublin Society for the Prevention of Cruelty to Animals after the snake was discovered. The snake is said to be underweight and dehydrated and will be cared for by a vet. Barry Andrews? Bo Huggins? Scott Price? Who is the culprit here? Fess up. Who knows? But one thing I do know: If the situation was reversed and we in Texas found a snake in a load from overseas, we would've just shot it and tossed it in the dumpster. Different cultures, I guess.

BEER BRIEFS:

UNITED BRANDS is rolling out Joose Margarita. The new brand will be available in 23.5 oz. cans and will be available in 48 states in the next few weeks, with a suggested retail price of $2.49 - $2.99 per can.

Until tomorrow, Harry

"Death comes not to the living soul, nor age to the loving heart."
-Phoebe Cary


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